under LG. For other East Asia (Chinese Taipei, Malaysia, Philippines, Singapore, Thailand) the difference is 7.0 under HG and 4.8 under LG. 48 All told, these scenarios make clear that the developing world has the most to gain from broad-based liberalization of trade and investment—including the services sectors of finance and banking, telecommunications, and distribution and delivery—operating within a macroeconomic environment of fiscal prudence and where competition policies and appropriate regulation ensures that domestic labor and capital adjustments and reallocations can take place. Economic gains through trade liberalization, particularly in services :
Trade and investment openness is one of the key policy reforms to create an environment in which Internet usage and the forces of the New Economy can increase efficiency and improve resource utilization. Economic theory and business experience both detail why trade and investment openness increase GDP and economic well-being; this very long history will not be repeated here.
As noted, however, effective performance of the services sector is necessary to unleash the power of networked information and communications technologies to restructure and transform the activities of all parts of the economy—including manufacturing, agriculture, the conduct of government, as well as services themselves. Thus, it is reasonable to look at recent analyses of the potential gain to GDP of trade and investment liberalization that focus in particular on the gains to liberalizing the services sector. 49 Several studies have estimated how much global and individual GDP might increase under different scenarios for a new round of trade negotiations.
Table III.1 shows the results for global GDP from CGE analysis by three research groups of liberalization of all sectors, manufacturing sectors, and services sectors. 50 Despite their significant differences (in baseline, in coverage of service sectors and in measurement and scenario for liberalization of service sector protection), two of these studies find dramatic increases to global GDP from service-sector liberalization. 48 OECD, The World in 2020, pp. 92. 49 For an overview of the approach taken by APEC members with regard to services liberalization, see Sherry Stephenson, “A Comparison of Existing Services Trade Arrangement Within APEC,” in Christopher Findlay and Tony Warren, eds.
Impediments to Trade In Services, Routledge: London, 2000, pp 287-340. See also Findlay and Warren, “Services Issues in APEC,” in the same volume. 50 Phillipa Dee and Kevin Hanslow (2001), “Multilateral Liberalization of Services Trade,” in Robert M. Stern, ed. Services in the International Economy, University of Michigan Press: Ann Arbor, pp118-139 . Thomas Hertel (2000), “Potential Gains from Reducing Trade Barriers in Manufacturing, Services, and Agriculture, “ Federal Reserve Bank of St. Louis Review , May-June 2000, vol 82, pp. 77-99. Drusilla K. Brown, Alan V. Deardorf, and Robert M.
Stern (2001), “Impacts on NAFTA Members of Multilateral and Regional Trading Arrangements and Initiatives and Harmonization of NAFTA’s External Tariffs,” presented at Industry Canada conference “North American Linkages”, June 2001. - 33-